|An investor follows trading at ACB Securities. Vietnamese shares tumbled for the second day in a row yesterday, following information that China had devalued its currency twice in two days. — VNS Photo Viet Thanh
HA NOI (VNS) — Vietnamese shares tumbled for the second day yesterday, following the information that China had devalued its currency twice in two days, forcing the State Bank of Viet Nam to revise the exchange rate band.
China's central bank yesterday morning cut its official guidance rate by another 1.6 per cent after a sudden devaluation of nearly 2 per cent on Tuesday that triggered a turmoil in world financial markets.
This is the second devaluation by China in two days, pushing the yuan down to 6.3306 per US dollar, the lowest since August 2011. Global stocks and emerging market currencies sank for two days in a row after China's moves.
The State Bank of Viet Nam (SBV) said the devaluation of yuan would greatly affect trade between the two countries. China is Viet Nam's biggest trading partner.
In response, SBV yesterday also decided to revise the exchange rate band from plus/minus 1 per cent to plus/minus 2 per cent, setting the ceiling rate at VND22,106 per US dollar and the lowest rate at VND21,240.
On the HCM Stock Exchange, the benchmark VN-Index lost nearly 9 points, or 1.44 per cent, to close the session at 604.24 points.
The market condition was negative with 155 stocks declining, 64 rising and 89 ending flat.
"People feels anxious and insecure about this unusual news. Nobody thought China would devalue its currency," said Le Dac An, head of investment division at Tan Viet Securities Co.
Discussing the impacts of Chinese and Vietnamese central banks' decision, An said it was not easy to say this was good or bad as the fall of dong could promote Vietnamese exports, but in the other hand, cheaper Chinese goods would also flood the Vietnamese market and throttle the domestic producers.
Banks and oil and gas companies were under heavy selling pressure yesterday and most of these shares saw prices go down. Meanwhile, export stocks which are deemed to benefit from SBV's decision were muted.
"Investors think the economic condition is still unstable and they tend to avert risks by selling stocks and holding onto cash," An said.
Liquidity declined yesterday, with more than 112 million shares worth VND2.13 trillion ($97.7 million) traded by the end of the session, down 10 per cent in volume and 20 per cent in value from Tuesday's levels.
"The market saw a two-month rise during late May-July and hit the peak of over 635 points on July 27. It is entering a technical correction since then and is exposed to downside risk in the context of high selling forces and low demand," An said.
On the Ha Noi Stock Exchange, the HNX-Index also edged down 1.3 per cent to end at two-and-a-half-month low at 82.75 points. It saw a loss of 0.68 per cent on Tuesday.
Of total 364 shares, almost half closed unchanged while the number of decliners doubled that of advancers here.
Activities of bargain investors in the last trading minutes lifted liquidity here as both market volume and value dropped 20 per cent from the previous session, totalling 50.4 million shares worth VND606.4 billion ($27.8 million). — VNS